LONDON/MARIKANA, South Africa, March 14 (Reuters) – Rising wage costs and strikes have revived the arguments in favour of automating South Africa’s loss-making platinum mines, but weak prices for the metal and tough conditions underground mean mechanisation remains a distant prospect.
The rest of the mining industry, from copper to coal, has been transformed in recent decades by automation, unmanned trucks and remotely controlled equipment.
That is in large part thanks to geology. In the cramped mines where platinum is found, the rock is still drilled, blasted and cleared by men. The platinum seams are damp, sweltering and claustrophobic places to work: men often drill in shafts so constricted that it is like mining under a table.
Mines are evacuated for hours a day so blasting can take place – a major inefficiency for operations with the thinnest of profit margins.
But mechanising platinum would be costly and the mining companies need to be convinced it is worth it. “They would need to believe that any investment in platinum mechanisation would significantly drive them down the cost curve,” said analyst Alison Turner at Panmure Gordon.
“I don’t think the belief is there – I don’t think the evidence is there.”
Mechanising the traditional drill-and-blast process would, in theory, improve safety, reduce costs and help resolve some of the social problems associated with a labour-intensive industry that moves tens of thousands of men from distant villages to live in hostels in South Africa’s platinum belt.
But the cost and risk of mechanising existing mines is simply too high. Machines built for conventional mining struggle with the narrow shafts, and many simply dig up too much ore for the same amount of platinum metal – increasing costs.
Companies are also alarmed by the example of Lonmin, which pushed mechanisation from 2004 only to abandon its efforts – and its chief executive – four years later largely because of high costs
Lonmin had wanted to mechanise 50 percent of the ore body by 2010, but by 2008 it was already questioning its decision. It has since spent 1.2 billion rand ($131 million) de-mechanising its Saffy shaft – one of two originally equipped to revolutionise the way platinum was mined.
“We still keep very small amounts of mechanised mining in Hossy shaft, but we don’t see ourselves as being the leaders in mechanisation at all,” Lonmin’s acting chief executive Simon Scott said in an interview last month.
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